Illinibucks

     Suppose the Campus gave (this means there is no additional charge for receiving the allocation) each student an allocation of "Illinibucks" which could be used for the sole purpose of moving to the head of the line. Use of the Illinibucks would occur at a pre-specified price set by the campus. What sort of thing would be a candidate for this? How would you spend your Illinibucks? What issues would arise if the administered price was too low? too high?
The best candidate for this system would be course registration, since all students need to fulfill a certain amount of required and elective classes I think the Illinibucks concept could be useful in that it would provide a better signal of the demand for courses, and would allow students to better quantify their preferences. If students were able to "cut the line" at a certain price then it would help to make the registration process a little more fair. For example, look at a class like ECON 203. Several business majors require ECON 203 in order to take higher level classes, as well as the Economics students. While the university provides both a large class size and three offerings for it, it is still a highly demanded class, to which those majors get first dibs at registering for. At the time I tried to register, I was not yet an economics major so I had a very difficult time registering for this class. Since it was a highly demanded class, had I been able to use the Illinibucks system, I most likely would have used all my Illinibucks to cut the line and get into the class. I think that high demand core classes, like ECON 203, would benefit from this because it would allow students who really need to get into the core class to do so, while providing the incentive for students who may not need to take it right away to use their Illinibucks to get into a highly demanded elective.
     Additionally it would provide a better signal as to what the student body needs offered that particular year. If the price is set correctly, and a greater deal more of people would decide to spend their Illinibucks on a class, then the department would know exactly how many excess students want to take the class and then be able to decide if offering another section would be the best remedy. Furthermore, it allows the students to add a quantitative value to how they register for their classes by "budgeting" how they would spend their Illinibucks, they would be able to prioritize which classes they absolutely need to take first and which ones that semester were less important. This provides a considerable benefit to the student because it would grant them some certainty that their wants and needs would be met by the university and refocus course selection on student interests rather than scheduling requirements. However, I suspect that this would be rather prone to "strategizing" where students would strategically pick the classes they need instead of displaying their true preferences, unless the mechanism for distributing the seats in a class would incentivize them to rank according to their real preferences. I know that if I were in this situation, I would spend my Illinibucks on the classes that I anticipated to have the highest demand, especially the sections at the best available times. There are always classes that will limit your schedule, so for me to be able to cut in line for a class that fits my most ideal schedule would be the best case scenario.
     I think the biggest problem with the Illinibucks system would be how the prices would be determined. In order to set the price, the University would have to set the supply and then estimate the demand accordingly so that the students who use their Illinibucks would get into the classes they need. On one hand, if the price was too high, then students wouldn't use their bucks and would most likely not even try to register since the high price would indicate to them that it is highly demanded. On the other hand, if the price were too low, then there would be a very big problem. Students would use their Illinibucks and then be faced with the dilemma of either an overcrowded classroom or not getting into the class. This would upset quite a few students because they would feel that they wasted their Illinibucks. If potentially students could place bids and then the price be set, they would be able to get a better estimation of what students would be willing to spend their Illinibucks on.

Opportunism

     I have had some interesting experiences with opportunism, both with me personally acting opportunistic and with others, and it has caused me to more carefully evaluate important decisions in my life. Opportunism can do a lot of good, but it can also do a lot of harm, and I have seen it play out both ways.

     One particular instance that I have been impacted by opportunism was in my freshman year while I was trying to find an apartment for the next year. Just before winter break, myself and three friends had decided that we would all choose to live together, and we had found a fairly nice, but very affordable four room apartment for all of us to live in. After finally confirming that everyone was okay with the price and location, we decided to sign the lease during the Tuesday of finals week. So my friend "A" and I went to the realtors office, assuming we would meet "C" and "Y" there (I am using the first letters of their names to protect their identities). After a while of them not showing up, "A" and I both gave them calls to see where they were, and of course they both had legitimate excuses for not being there. So, as naive, trusting freshman we decided to sign the lease and make the down payment since "C" and "Y" had promised to sign before they went home for the break.

That was the big mistake.

     After reminding them several times to sign the lease, "C" had eventually stopped answering our messages. When we finally returned to school, "C" didn't come back. It turns out he had been kicked out of the Parkland Pathways program for not keeping up his grades, and had failed to mention to us that he would not be returning. Subsequently, we had lost our fourth man for the apartment, so now it was only "A" and I that had signed the lease while "Y" still had yet to. That's when "Y" decided to act opportunistically. Realizing that keeping his word and signing the lease would hold him at a financial risk of having to pay extra for an unfilled room if we didn't find someone to replace "C"; he withheld his signature. He told "A" and I that he would be looking for another apartment or would move into the dorms before he would sign the lease, unless we found someone to fill that void. Since "Y" realized he had the upper hand and a safe option, he took it. Not only was it safer, but it left "A" and I scrambling to find a fourth roommate while he was able to keep a comfortable distance from the situation. After a lot of searching and vetting a few potentials, we finally found a fourth roommate, and "A" and I strategically planned them signing the lease so that "Y" would not be able to screw us over again. Eventually, this was resolved but it took a lot of work on my and "A"s part to get there, and I am still very bitter that "Y" had acted so opportunistically.

     At the end of the day, this experience taught me a valuable lesson in opportunism. I learned that even if the decision is rationally the best choice for you, sometimes it can do a lot of harm to others.  I understand why "Y" did what he did (and I know that I probably would have done the same thing, which is why we are still friends) but I still can't trust him after all of that. I realized that opportunism comes with a serious trade-off in that you lose the opportunity to come back with good graces, and more often than not destroy the valuable trust you may have with the other party. Looking back too, he probably could have done more to be diplomatic about withholding his signature, and subsequently not damage our friendship. Recently, I have been reflecting on this incident a lot, as I have to decide on whether or not to accept a job offer. The place I interned this past summer made me an offer that I must decide on relatively soon, but I am also waiting to hear back from other places that I would rather work. If it comes down to the deadline, I will accept the offer, but the hypothetical that is constantly on my mind is what I would do if I was made an offer from one of the better companies. Do I renege on my commitment to the first company and burn my bridges there? Do I try to anticipate this and negotiate an extended deadline? Would even negotiating give the negative impression that I am just being opportunistic? Do I even consider other companies once I've made my decision? All of these questions have elements of opportunism that I must carefully consider as I navigate the near future and could have long term impacts on my career.

Organizational Change and Transaction Costs

 This past summer I interned at Aon Hewitt as a Setup Configuration Specialist for Human Resource Outsourcing aligned to a large market client. My team managed the HR information of the client’s 250,000 employees, including their payroll, medical, retirement, and other benefits that they are provided. This information is stored in a secure database and we use a combination of several programs to manage this data. We sustain an ongoing relationship with the client, making changes to their plans and benefits delivery structure in our database and our benefits portal. The team is divided into Operations and Tech, where operations manages trends in workflows and interpreting client needs into business requirements, while Tech works to translate those requirements into the database and online portal and to correct any recurring errors. Therefore there are effectively three parties at play, the client, the operations side of the team, and the tech side of the team. My particular role was on the Tech side, and I was primarily tasked with testing new changes that the client wanted to be added before they were moved into the real time environment and to identify and debug any defects. At Aon Hewitt, I noticed a unique relationship between the merging of the organization and its transaction costs.

Before Aon Hewitt was Aon Hewitt, there was Aon, an insurance and risk managing company, and Hewitt, which provided business technology and HR software and support. Prior to being acquired by Aon, Hewitt had a relatively large and young work force, but after being acquired, things changed. Aon had felt that Hewitt was “fat” and that it could operate more efficiently with a smaller, so they cut the number of employees per team and almost entirely stopped hiring new employees. The long-term impact of this brings us to now, where they are having to hire huge classes of students right out of college to make up for the lost time. It almost felt like an entirely new generation because there was about a seven-year difference between the last class of new hires. This generation gap created many issues in the workplace. To start, the older employees were not able to relate to the younger ones, either through a failure to communicate or differing work styles, and thus team cohesion was definitely damaged. Additionally, some of the older employees had fallen into the trap of just clocking in and clocking out; delivering an acceptable product but not the best product. The structure of each team is relatively lateral, but those with more experience held positions with more responsibility, and each person held a specialized role on the team. This led to times when projects would be bottle necked by certain more experienced, but complacent, employees.

Transaction costs on my team existed in the form of policing and enforcement costs. Our particular client was rather tricky in that they have had a lot of customizations over the 12 years they have been with Aon Hewitt. These customizations have occurred through a lot of turn over on the team, of which good and bad team members have cycled through. The bad team members have coded changes poorly, and thus it is a constant struggle for the team to identify these defects and correct them while depending on them to make further customizations. The Operations side of the team was always heavily tasked with monitoring that the Tech side was actually implementing the business requirements they were given, and the client too frequently had to make sure that we were implementing the changes they wanted and abiding to the contract.

Despite these tensions within the work place, teams do manage to produce a product that is one of the best in the market. The Human Resources Outsourcing Market is definitely an economy of scale, in that only a few giants in the market are able to compete because they have the capital and labor capacity to manage large market clients. Since the services provided to its clients are experience goods, Aon Hewitt is able to differentiate its product from others through its reputation and other services it can offer. Many new clients come in through Aon Hewitt Consulting, and after seeing the quality product delivered they trust Aon Hewitt to properly manage their benefits distribution and add that on as an additional service.

John Hicks Bio

   
     John Hicks was born in 1904 to the son of a British journalist in Warwick, England. Although little is known about his early life, Hicks would go on to study Mathematics at Clifton College and then pursue a specialized education in "Philosophy, Politics, and Economics" at Oxford (1). He would graduate with second class honors, to which he felt provided him "no adequate qualification in any of the subjects" he studied (1).

     Despite his humble opinion regarding his education, Hicks would go on to make several critical contributions to the field of economics. The first of which being his idea of the elasticity of substitution, which refuted the idea that developments in labor technology "does not necessarily reduce labor's share of the national income" (2). His second contribution would be advance the work of Maynard Keynes, by inventing the graphical representation of an economy operating at equilibrium with less than full employment. In 1939, he would then go on to publish his book Value and Capital, which among other accomplishments was one of the first works to address general equilibrium theory. His final contribution would be establishing the Hicks Compensation Test, which essentially provided the economic theory to prove that free trade could be beneficial to all parties. His outstanding contributions to the field of economics would award him knighthood in 1964 and the Nobel Prize in 1972 (2).

     Having never heard of John Hicks before, his contributions are fascinating to me. I have always found Keynesian economics to be fascinating, and his contributions have likely impacted the world we live in today in an incredible way. Especially the Hicks Compensation Test, the impact that free trade has had on the modern world would either have been long fought or not nearly as prevalent had it not been for John Hicks.

(1) http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1972/hicks-bio.html
(2) http://www.econlib.org/library/Enc/bios/Hicks.html
(Image) http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1972/hicks-facts.html